What if there was a way to raise revenue when your car park is already full? Or one simple tactic to lure drivers in during a slow sales season? Thanks to dynamic pricing, these goals are firmly within your reach.
Dynamic pricing is a strategy in which businesses set flexible prices for their products in response to current market demands. These price changes are performed automatically by software agents - after all, manually tracking data and inputting updates would increase labour and insert substantial lag times. The software gathers data and utilises algorithms to alter prices based on rules set by the business owner.
A car park operator might choose to take one or more of the following factors into account when setting their dynamic pricing rules:
- Time - hour of the day, day of the week or annual season
- Level of demand - calculated by monitoring occupancy levels within the car park
- Competitors’ rates - the prices of neighbouring parking facilities
In all truth, dynamic pricing has attracted some bad press. Most of us have contemplated marinating in our own sweat on a long bus journey after opening Uber to reveal surge pricing in action. Or we’ve resented the necessity of downgrading creature comforts as flight and hotel prices peak the moment we agree to spontaneous holiday plans. Price insensitively and drivers could leave your car park with the nagging feeling they’ve been ripped off.
Not everyone understands that there are multiple models of dynamic pricing – of which surge pricing is only one. You can determine dynamic pricing rules to suit your facility and your drivers. This much-maligned strategy can appear to add value to the customer experience if you’re transparent about your operations and smart with marketing. Increasing prices during hours of peak demand can decrease city congestion as drivers reconsider options like Park & Ride. Emphasising lower prices at off-peak times can lure extra drivers into your facility with the promise of savings in reward for adjusting their schedules.
Here’s why you should give dynamic pricing a try:
1. Keep up with competitors. The market moves fast, and it’s likely that several other operators are vying for drivers’ custom in your area. You could offer the hottest deal in town one day and see sales languish the next. Dynamic pricing ensures you’ll stay up-to-the-minute and automatically factors your pre-selected variables into price updates.
2. Shake up stagnant sales. Parking is a perishable good. If you don’t sell your space by a certain time, you can’t store its value to win back at a later date. You lose nothing by selling a vacant spot for a discounted price: a few pounds are better than nothing at all.
3. Maximise your margins even when your facility is busy. If your top competitor sells spaces for a much higher rate or you’re dominant in your particular market, you can experiment with raising parking rates to find out just how much customers will pay.
4. Scalable automation. The larger your inventory, the more you stand to gain through adopting dynamic pricing. Fortunately, software solutions scale easily. Unlike manual adjustment, it takes no more effort to work with 100 car parks than it does for 1 – so expansionist leaders need not fret!
Ready to put dynamic pricing to the test? You’ll need to partner with a software provider to automate the process. ParkMaven’s Channel Manager not only supports dynamic pricing, but streams your vacant parking spaces across all top online marketing channels in real time too.
Get in touch through ParkMaven.com to pick our brains on how the Channel Manager can work for you.